All Ohio employers should begin using new state income tax withholding rates that take effect for payrolls ending on or after September 1, 2013. Employees will immediately benefit from the tax cuts in the recently passed state budget, according to an alert issued by the Ohio Tax Commissioner.
These tax cuts are just one part of a comprehensive tax reform package passed in the recent state budget. Small businesses will see tax cuts of 50%, while sales taxes will increase by .025% (the .025% sales tax rates being the offset to the income tax reductions). The budget reduces income tax rates for Ohio workers by 8.5% in 2013.
The lower tax withholding rates mean that Ohio employers should deduct 9% less state tax from workers’ paychecks beginning September 1. The new rate, to be in effect through the end of 2014, incorporates the 8.5% tax cut for 2013 and an additional 0.5% tax cut in 2014.
Employees should start to see more money in their paychecks and will see the full benefit package when they file their Ohio income tax returns next spring. The Ohio Tax Commissioner states that the tax reforms are designed to get Ohio back on track by strengthening “our competitiveness for jobs and economic development.”
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